U.S. shares give world markets lift, euro bounces

By Al Yoon

NEW YORK (BestGrowthStock) – U.S. equities rose on Monday as passage of landmark legislation to overhaul healthcare drove up pharmaceutical stocks, including those in Europe, while the euro rose against the dollar as risk appetite returned.

The euro, however, remained pressured by worries over Greece’s ability to secure aid to help service its ballooning debts. Traders said the rebound would be short-lived as investors are expected to remain cautious ahead of a summit of European Union leaders on Thursday and Friday.

Oil shed losses and rose above $81 a barrel as Wall Street gained and the dollar came off earlier strength.

The firm U.S. market encouraged a 0.15 percent gain for MSCI’s all-country world stocks index (.MIWD00000PUS: ) that had been in a downtrend since reaching a two-month high last week.

The U.S. House of Representatives passed the healthcare legislation late on Sunday, and while analysts raised concerns it will pinch corporate profits, they said much of the negative impact in stocks was priced in.

“There’s been a considerable amount of uncertainty in the healthcare arena surrounding the outcome of the legislation. The fact that we now have legislation removes that uncertainty, and it makes sense to get a bid under healthcare” stocks, said Kevin Caron, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.

Hospital and pharmaceutical companies are expected to benefit from the bill.

The Dow Jones industrial average (.DJI: ) climbed 43.91 points, or 0.41 percent, to 10,785.89. The Standard & Poor’s 500 Index (.SPX: ) rose 5.91 points, or 0.51 percent, to 1,165.81 and the Nasdaq Composite Index (.IXIC: ) rose 20.99 points, or 0.88 percent, to 2,395.40.

Pfizer Inc (PFE.N: ), the world’s largest drug company, rose 1.4 percent to $17.15. Merck & Co (MRK.N: ) advanced 0.63 percent to $38.30, while the Morgan Stanley Healthcare Payor Index (.HMO: ) gained 1.26 percent for its sixth straight increase.

Continued confusion about support Greece might need or get to help it sort out its debt crisis cast a shadow over stock markets. Germany urged Athens to solve its problems alone while Italy backed European Union support.

The pan-European FTSEurofirst 300 (.FTEU3: ) closed down 0.03 percent to 1,065.16 points, paring losses after the U.S. open.

Banks were among the biggest decliners on worries over European Union aid for Greece, but managed to pare losses.

India’s stock market (.BSESN: ) closed down nearly 1 percent after the central bank’s surprise 25-basis point rate hike on Friday, which came after local markets had closed. The hike helped weaken commodity stocks elsewhere.

Japan’s markets were closed on Monday for a holiday.

GREEK FIRE

The euro earlier slumped to a three-week low against the dollar, pressured by uncertainty over aid for Greece, but later rebounded as rising equities markets revived risk appetite.

“It seems there’s agreement there will be some sort of assistance to Greece, but it’s not clear what form that will take,” said Carl Hammer, currency strategist at SEB in Stockholm, adding that this would keep the euro under selling pressure.

At the close of New York trade, the euro was up 0.15 percent at $1.3551 after briefly touching a session high at $1.3568. Earlier the currency hit a three-week low at $1.3464. Traders cited short-covering as helping the euro after London trading wrapped up for the day.

The dollar declined against a basket of major trading-partner currencies, with the U.S. Dollar Index (.DXY: ) off 0.14 percent at 80.607.

Against the Japanese yen, the dollar slipped 0.47 percent to 90.10 yen.

Yields on benchmark euro zone government debt were lower as equities slipped. But the premium that investors demand to hold Greek government debt rather than euro zone benchmark Bunds rose to its widest since March 1. The cost of insuring Greek debt also rose.

Benchmark 10-year U.S. Treasury note yields declined by 0.03 percentage point to 3.66 percent.

U.S. light sweet crude oil rose 57 cents, or 0.71 percent, to $81.25 per barrel. It had dropped as low as $78.57 earlier when the dollar was higher. Dollar-denominated oil and metals become more expensive for holders of other currencies when the dollar rises.

Spot gold fell $6.40, or 0.58 percent, to $1100.10.

“Commodities sold off on fear of what the equities would do after the healthcare bill passage.

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(Additional reporting by Dominic Lau and Naomi Tajitsu in London and Leah Schnurr and Caroline Valetkevitch in New York; Editing by Kenneth Barry)

U.S. shares give world markets lift, euro bounces